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4 National Newsagent - May 2007 INDUSTRY NEWS Lotteries Shake-up "The combined businesses would deliver annual sales of more than $2 billion or about half of total Australian lottery sales" Tattersall's Acquire Golden Casket Lottery Corp for $530m Tattersall's Ltd has agreed to acquire all the shares of Queensland's Golden Casket Lottery Corporation from the Queensland government for $530 million. Tattersall's Chief Executive, Dick McIlwain, said Golden Casket was a logical t with Tattersall's lotteries businesses in Victoria, Tasmania, the Northern Territory and the ACT and "over time, will produce operating e ciencies." The combined businesses would deliver annual sales of more than $2 billion or about half of total Australian lottery sales. Mr McIlwain said the transaction was expected to lift earnings per share in the 2008 nancial year. The acquisition is subject to Queensland regulatory and legislative approval. Under the deal, Golden Casket's head o ce will be retained in Queensland and a national lottery centre will be established in Queensland to oversee Tattersall's lotteries business. The Queensland government will retain ownership of the lottery licence and the Golden Casket brand. Golden Casket sta and agents will be retained and 'protected' under the agreement Mcllwain said. Golden Casket will be appointed as the licensed lottery operator until 2072 and will have royalty-free, exclusive use of the Golden Casket brand. A new lottery terminal replacement program also will be rolled out in Queensland. Business as Usual for Agents The current Chief Executive of Golden Casket, Bill Thorburn, will continue to lead the new entity and says that this will not a ect day to day business. He said Golden Casket has retained operating rights to the exclusive lottery licence until 2016 and the licence has been extended to 2072 on a non-exclusive basis. "The new arrangements will vastly strengthen our position," he said. NSW Lotteries Next? There are just three state-owned lotteries left, with the most likely next target the one in NSW, Shaw stockbroking gaming analyst Greg Fraser told the Adelaide Advertiser. "It's a very logical end-game because larger lotteries create larger prizes and that's essentially what lotteries are all about. It's a scale game, economies of scale," Mr Fraser said. Mr McIlwain said there were still other government-owned lotteries businesses within Australia in which Tattersall's would be interested. "You could conclude that this would be the start of the process of unwinding those lotteries o ces from government ownership," he said. Mr McIlwain said Tattersall's was not looking at other opportunities overseas at the moment given the recent Talarius acquisition*. Keeping Competitive Queensland Premier, Peter Beattie, said the deal with Tattersall's would keep Golden Casket competitive. "Unless we're part of a national (lotteries) pool then in the end the return to Gold Casket customers and clients will shrink," he said. The Golden Casket acquisition is the company's third takeover in the past seven months and follows the $2 billion paid for UNiTAB in September and the $353 million snaring of British gaming machine operator Talarius Plc in conjunction with Macquarie Bank. Chief Executive of the new lotteries entity, Bill Thorburn, will be addressing newsagents at the National Convention on this issue in the Lotteries Workshop. The President of Lottery Agents Queensland, Bradley Dean, said that the move was a smart one and positive for the industry. The combination of Tattersalls and Golden Casket is a powerful one and the entity will be in a position to compete internationally. It appears that the existing agent infrastructure is 'protected' and the Golden Casket exclusivity will continue until 2016. Coupled with Golden Casket retaining the licence to operate (possibly non-exclusively) until 2072 he felt newsagents could continue in a 'business as usual' mode. Naturally there will be changes and developments, Dean said. The move is illustrative of where many businesses are going -- nationally and in a position to compete internationally. Since its merger with Unitab, Tattersall's has teamed up with Macquarie Bank to acquire British gaming machine operator Talarius Plc for $353 million. "What we're doing is diversifying ourselves further away from Victoria," Mr Mcllwain said. "In the gambling sector you don't want to be too dependant on a particular jurisdiction so we're building a nice geographic spread, operating in a number of jurisdictions." Mr Mcllwain said there were still other government- owned lotteries businesses within Australia which Tattersall's would be interested in. "You could conclude that this would be the start of the process of unwinding those lotteries o ces from government ownership," he said.